You contribute a great deal to this site so I will tread lightly but your post implies "don't worry" Reg NMS protects your order. I apologize if this isn't what you meant. For those who don't know - Reg NMS was introduced many years ago and it was designed to protect investors from predatory behavior (like front running/trade throughs etc). Although this was necessary and definitely helped the average investor - these positive affects have been minimized today. Today, regulators can't regulate trading that takes place in "sub seconds". Given that predatory behavior is taking place in "micro seconds" and given that virtually all marketable orders take place in "sub seconds" makes Reg NMS rather meaningless. So this means - "front running/trade throughs CAN happen" without consequence in today's markets. Whether the SEC simply turns a blind eye or they don't have the technology doesn't matter - the fact is the SEC isn't enforcing Reg NMS. It starts with the HFT's but the HFT's would be nothing without the help of "most" Exchanges and brokers as they enable this practice. Exchanges/brokers have learned that maximizing their bottom line is actually directly opposite to what is in the best interest of investors but their focus isn't on the average investor. Over the last few months we have seen some crazy activity in the marketplace - so much that data for certain symbol sets (certain letters) have slowed down. Sometimes this is purposely done by HFT's to slow the data feeds of the avg investor similar to a "denial of service attack". If you're an active trader you would have noticed this. For example - we have seen delays at times during the day on symbols starting with S and C as recent as this past Thurs/Fri which can slow down your order entry/quotes by a couple seconds. As a side note: a solution to this is you can enter your order directly to an Exchange like the IEX and order order gets their instantly. Take a look at this video (8 years old) of what happens every day in the market. Today the activity is probably 5 fold. In these videos there is only 10/11 Exchanges. In reality there is over 40 places your equity order can trade. Look at the timestamp at the top. The SEC's technology basically sees everything that happens every second! Do you think they can properly regulate this? sped up: Whether it is rules like (maker taker fees or payment for order flow) or the actual fragmentation of the markets that creates all this chaos doesn't really matter - the bottom line is all investors/traders should be very careful and should understand that the only person looking after their $$$ is themselves. This stuff doesn't really matter to some (certain kinds of traders) but it is still important to recognize the reality of marketplace. I will steal a quote from someone else that explains today's markets: "It is much EASIER and SAFER to steal money with a pen than it is with a gun"
Happens sometimes when I place market orders on options. The offer at $2.55 goes away for a less than a second and I get filled at $2.56. I am a Piker, but it's becoming more frequent yet I pay the same as my IBKR accounts or less because Knight Citadel loves making a market. Sub $10 stocks I pay less on Online free than ibkr and get better price improvement. Routing to my favorite exchanges cost less. I've sat on my smart order while my online freebies were filled faster. I only make 200 day trades or more, can't do 500+ as much as I use to. Just my sample data, do what you want with it
Couple points NMS ain't perfect but enforcement are the member firms and unless they challenge the fill there is way too much data in the US and it's too costly to do any real analysts, but I firmly believe the attention is good and vastly superior to the old ITS system. Too many small trades in the US and we are finally seeing the US detour off the road to becoming - IMHO - a data market and not a stock market. Your points are well taken and we should figure out a better way to trade retail. @mskl you points are valid a well taken - but again, IMHO - retail should get cordoned off and protected - it's mostly noise as it relates to a lot of NMS. Four exchanges two reg NMS securities two NMMO option markets. NMS +/- 1000 shares and an institutional for size cutouts and for the AMZN and BRK.A. Retail plays anywhere they want. Common order book and an NMS security lives in one order book only. Options +/- 50 and then an institutional NBBO book for over 50. Display NMS and NBO. 16 options exchanges and generally 3 to 4 shops are half the MM-not sure I can name them sober Everything lives in one book and everything is transparent. Speed bump everything and fight over times, monopolies. Buy a G6 with the ORF fees.
Actual enforcement only comes from the ultimate regulator (The SEC). Everyone else that matters (brokers/exchanges) is extremely happy with the status quo. Firms look the other way because they are paid to do so (payment for order flow). Talk about a conflict of interest. You think that TD would complain to regulators about fills that Citadel is giving their customers?? while Citadel is paying TD for the orders?? too funny Imagine after a big snow storm and some guy knocks on your door and says - "I will pay you $100 to clean your driveway". You'd be thinking - "what the??" That is what payment for order flow is. Executing customer orders is no longer an Expense for these brokers but it is now Revenue. No longer do they need the software - or the staff and in some cases they don't even pay Exchange fees. Of course the brokers are going to say - sure -here ya go - Mr Citadel and Mrs Virtu - take my customer orders - have fun - oh and can you shovel my driveway..... Everything lives in one book is the solution. Unfortunately, it will likely never happen because the fragmentation is used to confuse and distort reality.